Black Friday deals lure U.S. shoppers, biggest sales gains online

NEW YORK (Reuters) - Shoppers across the United States snapped up deep discounts on toys, clothing and electronics both online and at stores on Black Friday, giving retailers a strong start to their make-or-break holiday season.

A healthy economy and rising wages gave people the confidence to splash out on retailers’ annual raft of bargains.

“The prices today are very good,” said Jose Manuel Cruz Hernandez, 59, who hit the Del Amo Fashion Center in Torrance, California, with his sister Paulina Cruz, 66, who comes every year from Mexico City to shop.

The pair spent $120 on princess dolls and other toys at the Walt Disney Co store, where items were 20 percent off. They spent a similar amount at Gap Inc, where items were discounted by about 55 percent.

Cruz Hernandez, a foreman at an aerospace firm, said he was comfortable with the U.S. economy and his own finances and plans to spend another $1,000 on holiday gifts - about the same as last year.

A similar story played out online, where shoppers spent $643 million by 10 a.m. ET, up 28 percent from a year ago, according to Adobe Analytics, which tracks transactions at most of the top U.S. online retailers. Smartphone sales in particular contributed to gains.

Foot traffic looked healthy at stores offering discounts, although detailed numbers on brick-and-mortar holiday sales will not be available for several days.

“Overall, Black Friday doesn’t have the sense of urgency as in the past and feels more like a busy regular weekend day in many of the stores,” said Dana Telsey at Telsey Advisory Group.

“Many of the promotions were available for the past couple of weeks,” Telsey said. “We haven’t noticed desperation from any retailer.”

Shares of Macy’s Inc, Kohl’s Corp, and Target Corp all closed down on Friday and weighed on the broader S&P 500 retailing index, which closed down 0.56 percent.

Investors are concerned retail sales growth may have peaked in the second quarter and business will slow down as comparisons get tougher, said Brian Yarbrough, retail analyst with Edward Jones.

STRONG ONLINE SALES

Early numbers showed overall retail sales, both in stores and online, were in line with expectations, according to Mastercard Inc’s SpendingPulse retail report. The firm expects overall Black Friday sales to top $23 billion this year, up from $21 billion last year.

Mastercard combines sales activity in its payments network with estimates of cash and other payment forms. It said cold weather in the eastern United States and wet weather in the west may be pushing more consumers online.

Online spending is on track to hit $6.4 billion on Friday, Adobe said. Online sales on Thanksgiving Day were up 28 percent at $3.7 billion.

The National Retail Federation forecast U.S. holiday retail sales in November and December will increase between 4.3 and 4.8 percent over 2017 for a total of $717.45 billion to $720.89 billion. That compares with an average annual increase of 3.9 percent over the past five years.

About 38 percent of American consumers plan to shop on Black Friday, a Reuters/Ipsos poll showed last week.

People shop during the Black Friday sales shopping event at Roosevelt Field Mall in Garden City, New York, U.S., November 23, 2018. REUTERS/Shannon Stapleton

Very cold weather in the U.S. Northeast may have kept some shoppers at home, although industry analysts also reported added demand for coats and other warm clothing. An Athleta clothing store in Tysons, Virginia, provided hot chocolate with marshmallows to women in line for the dressing room.

DEAL FRENZY

Shoppers picked up big-ticket items such as TVs, Apple Inc iPads and Watches at Target, while phones, toys, gaming consoles and cookware were top sellers at Walmart Inc.

Many shoppers sought out air fryers, which do not use oil to deep fry food and Instant Pots. Kohl’s Chief Executive Michelle Gass told CNBC the company was selling 60 Instant Pots per minute online on Thanksgiving Day.

While most retailers have not changed their deals and discounts year-over-year, many have moved their start dates earlier and offered more teasers, according to deal site RetailMeNot.

The deepest discounts in apparel and accessories were offered by Michael Kors, which ran a 60 percent discount sale; Gap, which offered 50 percent off site-wide; and Nordstrom, which gave away up to 60 percent on merchandise.